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Keep Avoiding Fastly After Dismal Q2 Earnings

Aug. 05, 2021 7:31 AM ETFastly, Inc. (FSLY)NET17 Comments


  • After Fastly's Q1 earnings, I explained why I wasn't a buyer of the stock.
  • Q2's earnings, released Wednesday, were equally disappointing and confirmed that the company has major problems.
  • Fastly stock, despite the big drop, remains expensive.
  • Shares would have to fall much further to attract bargain shoppers.
  • Looking for a helping hand in the market? Members of Ian's Insider Corner get exclusive ideas and guidance to navigate any climate. Learn More »

TechCrunch Disrupt SF 2014 - Day 3
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Back in May, I published an article laying out why I Wasn't Buying Fastly. This wasn't a popular position. After all, Fastly (NYSE:FSLY) stock had tumbled from over $100 not that long ago

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This article was written by

Ian Bezek profile picture

Ian Bezek is a former hedge fund analyst at Kerrisdale Capital. He has spent the decade living in Latin America, doing the boots-on-the ground research for investors interested in markets such as Mexico, Colombia, and Chile. He also specializes in high-quality compounders and growth stocks at reasonable prices in the US and other developed markets.

Ian leads the investing group Learn more .

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (17)

The Stock Stooge profile picture
I never heard a convincing logic for why this service won't eventually be provided better by the hyperscalers like aws and azure
lebedevil profile picture
I would warn you all not to get too bearish in this market. In 3 hours of trading, FSLY's already clawed back 10% of its losses post-earnings. Long and strong
Both as an investor and a developer, I've struggled to understand the fascination the market has had with Fastly. I fully admit I'm probably missing something, but nothing I've read about them makes me say, "yeah, I should be using them".
Thanks for this good article. You correctly put the warning signal out in the previous article as it was becoming increasingly clear that FSLY was grossly overvalued. I agreed then and continue to agree now. However, the company does have a good product, so there could be very well be a turnaround story in the future or a possible buyout. I do agree that it will drop down further for now. In your opinion, at what point do you think it becomes a good bargain hunting stock?
do tell....
FSLY is a broken stock and broken company! One must have a wound in the head to invest in FSLY. If you have money in FSLY - cut your losses and move on. More pain is coming. This is just the beginning. My 2 cents.
I'm down about 20% in the past few weeks on Chinese stocks, but at least I didn't buy Fastly.
KP2021 profile picture
you called it, so praise is deserved for your previous article. the only part i would push back on this new article is:

'11x revenues for a slow growth business with operational problems and a chunky net loss would be considered quite expensive in most tech stock environments.'

I would say the product is good and the problems are temporary. Long term view of online content and digital transformation is positive on a CAGR basis, and speed of access to website/content is a primary need for consumers and businesses, and fastly does that well. Outages happen in tech and the way they dealt with it was quite exemplary. the growth being slow as it stands is fair, but longer term, i would lean on it not being slow.

their model of paying for usage may need to be revised (which causes a lot of volatility), but overall considering the quality of the product and current valuation, I would say that it's hard to see further downside once the trend traders have finished with it (don't try catch a falling knife etc).
Value Digger profile picture
Some stock pickers who focus on "growth stocks" recommended FSLY when it was above $50...

They ignored or downplayed FSLY's weak fundamentals...

And they have disappeared over the last months...
@Value Digger "And they have disappeared over the last months..."

like they always do...
@Value Digger why have you disappeared from the CRWD board? Last I heard you recommended followers to short CRWD at $48. Stock is trading at $260+ today.
Value Digger profile picture
@Bnh91 This is FYI:


Now you know how I and the subscribers to my research have been making money....
Another article based only on numbers. No deep dive into the businesses. "it's becoming more and more apparent that Cloudflare is simply a much better performing business than Fastly" ---- only based on numbers? No analysis on the underlying products? Numbers could be misleading when some unlucky things happen.
Fastly have repeatedly failed to meet consensus targets. This is one of alarming indicator pointing towards bad leadership running company. Until there is change in top leaders I am staying away.
@bhurakoi i heard it said the leader was a genius, no?
I've been warning people about fsly since $100. All I get is people mad at me and SA writers insulting me. In the mean time the insiders have made out like bandits, while the longs hold fools gold. Most SA writers missed the effect bad mgmt can have on a company even if they have a great product. Lesson learned. Abdiel better get the company sold and or fire the entire mgmt and put in their own.
CJH Research profile picture
@Lost-at-sea I got the critical news here though. There’s was a news article from an analyst who found their web traffic was flat all Q1. I sold it all right away still at a small profit. People should pay more attention to news than analysis articles.

Their CFO gave a bullshit guidance of a flat Q2 but growth numbers for 2021. Then quits. That’s not how momentum works. Sure enough 2021 guidance is adjusted down now. I don’t but their CEO bs excuse. Poor management on such great potential.
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